401k Vs Roth IRA

[DHK]

Spoken like someone who has NO F##$$ng clue about retirement plans! (I sure hope you're not advising anybody on this subject.)

You can't pick an IRA until you look at the company sponsored options and compare that to the adjusted gross income of the employed person as well as their marital status.

If there's NO company plan, then one can contribute the maximum to a traditional IRA plan.

If there's a company plan, then one can contribute to the 401(k) plan and contribute to an IRA within income limits.

You can always make a non-deductible contribution to a traditional IRA and filing form 8606. You'd then need to track your basis in this IRA and never co-mingle it with your other IRAs.

There's a LOT more to read on this subject. I recommend reading up on it by referencing IRS Publications 560 and 590.

 

[Norwayguy]

Spoken like someone who has NO F##$ clue about retirement plans! (I sure hope you're not advising anybody on this subject.)

You can't pick an IRA until you look at the company sponsored options and compare that to the adjusted gross income of the employed person as well as their marital status.

If there's NO company plan, then one can contribute the maximum to a traditional IRA plan.

If there's a company plan, then one can contribute to the 401(k) plan and contribute to an IRA within income limits.

You can always make a non-deductible contribution to a traditional IRA and filing form 8606. You'd then need to track your basis in this IRA and never co-mingle it with your other IRAs.

There's a LOT more to read on this subject. I recommend reading up on it by referencing IRS Publications 560 and 590.

DHK another this this guy is totally missing out is the ease of access to IRAs. When I first got into the business I just looked at the numbers....After being in the business for a while selling 403(b) programs (pre-regulation change) and IRAs I saw time and time again people would take a 403(b) policy loan or do an early withdrawal from IRAs paying the taxes and penalties to take care of a short term problem....Those funds are almost never repaid even most of the loans would default.

Show me a 401K without loan privileges, a TPA that is tough on hardship distributions and okay investment options and if I an get the client to put a percentage in the 401K and just forget about it they will be well ahead of their peers who keep pulling money out of their retirement accounts.

I remember getting a phone call from the bookkeeper at a non-profit I had a 403(b) program with...A client was saying he was not informed he couldn't take money out prior to 59 1/2 and thought it was just a savings account...ended up taking and defaulting on a 403(b) loan he left just the policy minimum in the account fast forward two years and I get a call from the Bookkeeper at the same company (new person). This same client is making the exact same claim that he thought it was a savings account etc...So I call the client back and call him on his story and he admits he new but he needs the money now and wants to take a loan...I informed him he couldn't because his previous loan was still defaulted and he didn't qualify for a hardship. He asked me to list the qualifying requirements to pull money out and I did. he said he would find another way to pay the bill...Two weeks go by and I see the surrender form come through and turn it over and separation of service is listed. I call the bookkeeper back and he had quit. You won't believe that they rehired him a week after he cashed the distribution check.

You can't always protect people from themselves.